Financial News

PNFP Reports 1Q24 Diluted EPS of $1.57

Total revenues increased 32.1 percent linked-quarter annualized and 6.6 percent year-over-year

Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $1.57 for the quarter ended March 31, 2024, compared to net income per diluted common share of $1.76 for the quarter ended March 31, 2023, a decrease of 10.8 percent.

Several meaningful items impacted first quarter 2024 results. The firm’s allowance for credit losses increased to 1.12 percent of total loans at March 31, 2024, compared to 1.08 percent at Dec. 31, 2023. Although, key loan quality metrics like the potential problem loans to total loans ratio and the classified asset ratio remain better than many of the firm's peers and lower than where the firm has historically operated over the longer term, the firm determined additional reserves were needed to account for incremental weakness of one previously disclosed problem borrower and to better position the firm to navigate the credit implications of a higher-for-longer interest rate environment. Additionally, the firm recognized a mortgage servicing asset associated with its Freddie Mac Small Business Lending (SBL) platform of approximately $11.8 million, which has been reflected in other noninterest income. Lastly, in response to information provided by the FDIC during the quarter, the firm increased its other noninterest expense by $7.3 million for a FDIC special assessment. This is in addition to the $29.0 million that the company recognized in the fourth quarter of 2023.

"Inflation appears to be more difficult to tame than the Fed had predicted," said M. Terry Turner, Pinnacle's President and Chief Executive Officer. "Regardless of the economic landscape, our focus continues to be on strengthening our balance sheet and growing our earnings and tangible book value, while continuing to take steps that we believe will position our firm for long-term growth.

"We continued to execute our unique business model during the first quarter. We are reporting strong core earnings inclusive of a meaningful provision for credit losses. We recruited 37 new revenue producers during the quarter, including 14 in our newer markets of Atlanta, Washington D.C., Birmingham and Jacksonville. And as another demonstration of why we are so successful in hiring the best bankers in our markets, FORTUNE and Great Place to Work® recognized our firm as No. 11 on their list of the 100 Best Companies to Work For in the United States. We have been on FORTUNE’s top 100 list for the last eight years, but this is our highest ranking, further demonstrating the staying power of our culture, even as we have become a larger, high-growth bank.

"Our firm is uniquely positioned in what we believe are many of the best banking markets in the Southeast. As a result, combined with our distinctive operating model, we remain confident in our ability to generate long-term sustainable growth in loans, deposits and earnings in spite of the current economic volatility."

BALANCE SHEET GROWTH AND LIQUIDITY:

Total assets at March 31, 2024, were $48.9 billion, an increase of approximately $934.3 million from Dec. 31, 2023, and $3.8 billion from March 31, 2023, reflecting a year-over-year increase of 8.4 percent and a linked-quarter annualized increase of 7.8 percent, respectively. A further analysis of select balance sheet trends follows:

 

Balances at

Linked-

Quarter

Annualized

% Change

Balances at

Year-over-Year

% Change

(dollars in thousands)

March 31,

2024

December 31,

2023

March 31,

2023

Loans

$

33,162,873

$

32,676,091

6.0

%

$

30,297,871

9.5

%

Securities

 

7,371,847

 

7,323,887

2.6

%

 

6,878,831

7.2

%

Other interest-earning assets

 

3,195,211

 

2,673,235

78.1

%

 

3,201,938

(0.2

)%

Total interest-earning assets

$

43,729,931

$

42,673,213

9.9

%

$

40,378,640

8.3

%

 

 

 

 

 

 

Core deposits:

 

 

 

 

 

Noninterest-bearing deposits

$

7,958,739

$

7,906,502

2.6

%

$

9,018,439

(11.8

)%

Interest-bearing core deposits(1)

 

26,679,871

 

25,832,415

13.1

%

 

23,035,672

15.8

%

Noncore deposits and other funding(2)

 

7,506,409

 

7,573,489

(3.5

)%

 

6,865,003

9.3

%

Total funding

$

42,145,019

$

41,312,406

8.1

%

$

38,919,114

8.3

%

(1):

Interest-bearing core deposits are interest-bearing deposits, money market accounts and time deposits less than $250,000 including reciprocating time and money market deposits.

(2):

Noncore deposits and other funding consists of time deposits greater than $250,000, securities sold under agreements to repurchase, public funds, brokered deposits, FHLB advances and subordinated debt.

 

Three months ended

 

March 31,

2024

December 31,

2023

March 31,

2023

Average loan to deposit ratio

84.73

%

84.05

%

83.97

%

Uninsured/uncollateralized deposits to total deposits(1)

30.48

%

31.32

%

33.23

%

(1):

Includes the effect of placement of deposits through the IntraFi network.

  • Approximately 46.5 percent of first quarter 2024 loan growth was related to commercial and industrial and owner-occupied commercial real estate categories, two segments the firm intends to continue to emphasize throughout the remainder of 2024.
  • On-balance sheet liquidity, defined as cash and cash equivalents plus unpledged securities, remained strong, totaling $7.6 billion as of March 31, 2024, representing a $646.7 million increase from the on-balance sheet liquidity level of $6.9 billion as of Dec. 31, 2023. Increased deposit inflows during the quarter contributed to the increase in other interest earning assets and are expected to be used to fund future loan growth of the firm.
  • Noninterest bearing deposits increased 2.6 percent on a linked-quarter annualized basis as of March 31, 2024, when compared to Dec. 31, 2023. In comparison to March 31, 2023, noninterest bearing deposits decreased by 11.8 percent. The average balance of the firm’s noninterest bearing accounts was $31,353 at March 31, 2024, compared to $31,603 at Dec. 31, 2023.

"We are particularly pleased with our strong deposit growth during the first quarter, which grew $862.2 million in the quarter, a 9.0 percent linked-quarter annualized growth rate," Turner said. "Importantly, our end-of-period noninterest-bearing demand deposit accounts grew 2.6 percent linked-quarter annualized after having experienced declining demand deposit volumes for several quarters. During the first quarter, our loans grew at an annualized rate of 6.0 percent, which is slightly below what we expect for all of 2024. While we are benefited by operating in several of the best banking markets in the Southeast, our loan and deposit growth is primarily a result of the market share movement associated with our ongoing hiring in those markets over the last several years."

PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) GROWTH:

Pre-tax, pre-provision net revenues (PPNR) for the three months ended March 31, 2024, were $185.8 million, a decrease of 2.2 percent from the $190.0 million recognized in the three months ended March 31, 2023.

 

Three months ended

 

March 31,

(dollars in thousands)

2024

2023

% change

Revenues:

 

 

 

Net interest income

$

318,034

 

$

312,231

1.9

%

Noninterest income

 

110,103

 

 

89,529

23.0

%

Total revenues

 

428,137

 

 

401,760

6.6

%

Noninterest expense

 

242,365

 

 

211,727

14.5

%

Pre-tax, pre-provision net revenue (PPNR)

 

185,772

 

 

190,033

(2.2

)%

Adjustments:

 

 

 

ORE expense (benefit)

 

84

 

 

99

(15.2

)%

FDIC special assessment

 

7,250

 

 

NM

Recognition of mortgage servicing asset

 

(11,812

)

 

NM

Adjusted PPNR

$

181,294

 

$

190,132

(4.6

)%

 

Three months ended

 

March 31,

2024

December 31,

2023

March 31,

2023

Net interest margin

3.04

%

3.06

%

3.40

%

Efficiency ratio

56.61

%

63.37

%

52.70

%

Return on average assets

1.00

%

0.76

%

1.26

%

Return on average tangible common equity (TCE)

12.11

%

9.53

%

15.43

%

Average loan to deposit ratio

84.73

%

84.05

%

83.97

%

  • Revenue per fully diluted common share was $5.60 for the first quarter of 2024, compared to $5.16 for the fourth quarter of 2023 and $5.28 for the first quarter of 2023, an increase of 6.1 percent year-over-year.
  • Net interest income for the first quarter of 2024, was $318.0 million, compared to $317.3 million for the fourth quarter of 2023 and $312.2 million for the first quarter of 2023, a year-over-year growth rate of 1.9 percent. Net interest margin was 3.04 percent for the first quarter of 2024, compared to 3.06 percent for the fourth quarter of 2023 and 3.40 percent for the first quarter of 2023.
  • Noninterest income for the first quarter of 2024, was $110.1 million, compared to $79.1 million for the fourth quarter of 2023 and $89.5 million for the first quarter of 2023, a year-over-year increase of 23.0 percent.
    • Wealth management revenues, which include investment, trust and insurance services, were $26.0 million for the first quarter of 2024, compared to $23.5 million for the fourth quarter of 2023 and $22.5 million for the first quarter of 2023, a year-over-year increase of 15.7 percent. The increase in wealth management revenues was attributable to several factors, but primarily is the result of an increase in capacity with more revenue producers and the placement of those producers in Pinnacle’s newer markets like Washington D.C., Birmingham and others.
    • During the first quarter of 2024, net gains from mortgage loans sold were $2.9 million, compared to $879,000 in the fourth quarter of 2023 and $2.1 million in the first quarter of 2023. Similar to wealth management, the increase in mortgage fee income was primarily attributable to increases in capacity with more originators in Pinnacle's newer markets.
    • Income from the firm's investment in Banker's Healthcare Group (BHG) was $16.0 million for the first quarter of 2024, compared to $14.4 million for the fourth quarter of 2023 and $19.1 million for the first quarter of 2023, a year-over-year decline of 16.0 percent.
      • BHG's loan originations decreased to $692 million in the first quarter of 2024, compared to $786 million in the fourth quarter of 2023 and $1.0 billion in the first quarter of 2023.
      • Loans sold to BHG's community bank partners were approximately $533 million in the first quarter of 2024, compared to approximately $446 million in the fourth quarter of 2023 and $704 million in the first quarter of 2023.
      • BHG increased its reserves for on-balance sheet loan losses to $306 million, or 10.3 percent of loans held for investment at March 31, 2024, compared to 9.3 percent at Dec. 31, 2023 and 5.2 percent at March 31, 2023. The year-over-year increase in reserves as a percentage of loans held for investment was impacted by BHG's adoption for lifetime credit losses associated with its implementation of the current expected credit loss (CECL) methodology on Oct. 1, 2023.
      • BHG increased its accrual for estimated losses attributable to loan substitutions and prepayments to $391 million, or 5.7 percent of the unpaid loan balances that were previously purchased by BHG's community bank network, at March 31, 2024, compared to 5.4 percent, or $357 million, at Dec. 31, 2023 and 5.81 percent, or $350 million, at March 31, 2023.
    • Other noninterest income increased $24.1 million between the first quarter of 2024 and the fourth quarter of 2023 and $17.6 million from the first quarter of 2023. Impacting other noninterest income was approximately $11.8 million associated with the aforementioned recognition of the SBL mortgage servicing asset, as well as increased income from the firm’s Bank Owned Life Insurance (BOLI) policies compared to the first quarter of 2023. In the fourth quarter of 2023, the firm incurred approximately $7.2 million in policy surrender charges and $9.1 million in tax penalties attributable to restructuring BOLI policies. The firm believes the reimbursement ("payback") period from the date of the restructuring should approximate 18 months.
  • Noninterest expense for the quarter ended March 31, 2024, was $242.4 million, compared to $251.2 million in the fourth quarter of 2023 and $211.7 million in the first quarter of 2023, reflecting a year-over-year increase of 14.5 percent.
    • Salaries and employee benefits were $146.0 million in the first quarter of 2024, compared to $133.3 million in the fourth quarter of 2023 and $135.7 million in the first quarter of 2023, reflecting a year-over-year increase of 7.6 percent.
      • Full-time equivalent associates increased to 3,386.5 at March 31, 2024 from 3,357.0 at Dec. 31, 2023 and 3,281.5 at March 31, 2023, a year-over-year increase of 3.2 percent.
      • Incentive costs in the first quarter of 2024 were approximately $1.7 million higher than the fourth quarter of 2023 and $1.1 million higher than the amounts recorded in the first quarter of 2023.
      • Employee benefits costs reflect the seasonality of payroll taxes, medical deductibles, and other benefits costs. Benefit costs in the first quarter of 2024 were approximately $5.5 million higher than the fourth quarter of 2023 and $898,000 higher than the amounts recorded in the first quarter of 2023.
    • Equipment and occupancy costs were $39.6 million in the first quarter of 2024, compared to $38.0 million in the fourth quarter of 2023 and $30.4 million in the first quarter of 2023, reflecting a year-over-year increase of 30.6 percent. Impacting the quarterly changes in equipment and occupancy expense between the first quarter of 2024 compared to the fourth quarter of 2023 was the impact of new equipment and facilities annual rent escalators on various properties and equipment that have been placed into service. Compared to the first quarter of 2023, several factors contributed to the increase of equipment and occupancy costs, including new equipment and facilities, rent escalators on various properties and the previously disclosed sale-leaseback transaction executed in the second quarter of 2023.
    • Noninterest expense categories, other than those specifically noted above, were $56.7 million in the first quarter of 2024, compared to $79.8 million in the fourth quarter of 2023 and $45.7 million in the first quarter of 2023, reflecting a year-over-year increase of 24.2 percent. Primarily impacting the quarterly changes in other noninterest expense between the fourth quarter of 2023 and first quarter of 2024 was the impact of a reduction in the amount of FDIC special assessment charges in the first quarter of 2024 compared to the fourth quarter of 2023. The special assessment also impacted the comparison of other noninterest expense to the first quarter of 2023, given there was no special assessment last year.

"With the most recent CPI release, we have adjusted our forecast for Fed funds rate decreases from four to two with the first of those starting late in the third quarter of this year,” said Harold R. Carpenter, Pinnacle's Chief Financial Officer. "Therefore, we are modifying our net interest income outlook slightly for the year. Our belief is that we will experience 8 to 10 percent growth in net interest income for this year. As to fee income, we believe the strong start in the first quarter means our core fee revenues should be higher than originally anticipated for 2024. Accordingly, excluding the impact of BHG, the recognition of the $11.8 million of mortgage servicing rights in the first quarter of this year and, in the case of 2023, the $85.7 million gain on the sale of fixed assets as a result of the sale-leaseback transaction, $19.7 million in losses on sale of investments securities and $7.2 million in BOLI restructuring charges, we believe our growth in fee revenues should approximate 10 to 14 percent in 2024 over 2023.

"We continue to estimate that BHG fee income should approximate a mid-single digit percentage increase in 2024 over the $85.4 million in 2023. BHG's first quarter was impacted by the successful completion of their ninth securitization issuance of approximately $300 million. This securitization was comprised completely of consumer loans with a yield difference between the borrower's coupon rate and the securitization borrowing rate of approximately 10.1 percent, one of the highest spreads for a securitization by BHG in its history, reflective of the significant amount of interest BHG received for the transaction. BHG's ability to access the capital markets to secure incremental funding through securitizations of its held-for-investment loan portfolio has contributed to additional flexibility for BHG to fund its operations.

"Excluding the additional FDIC special assessment in the first quarter of 2024, our operating expense was in line with our expectations. We did reduce our anticipated incentive costs for the first quarter primarily as a result of increased provision expense triggered largely by the increase in our allowance for credit losses. We currently are accruing for payout on our annual cash incentive plan at approximately 80 percent of target, less than we had originally planned. Even through all of these matters, we are maintaining our expense outlook at $950 million to $975 million for the year, exclusive of the impact of the FDIC special assessments we incurred in the first quarter and any additional assessments the FDIC may decide to impose this year."

CAPITAL AND SOUNDNESS:

 

As of

 

March 31,

2024

December 31,

2023

March 31,

2023

Shareholders' equity to total assets

 

12.5

%

 

12.6

%

 

12.6

%

Tangible common equity to tangible assets

 

8.5

%

 

8.6

%

 

8.3

%

Book value per common share

$

76.23

 

$

75.80

 

$

71.24

 

Tangible book value per common share

$

51.98

 

$

51.38

 

$

46.75

 

Annualized net loan charge-offs to avg. loans (1)

 

0.20

%

 

0.17

%

 

0.10

%

Nonperforming assets to total loans, ORE and other nonperforming assets (NPAs)

 

0.33

%

 

0.27

%

 

0.15

%

Classified asset ratio (Pinnacle Bank) (2)

 

4.94

%

 

5.22

%

 

2.71

%

Construction and land development loans as a percentage of total capital(3)

 

77.50

%

 

84.20

%

 

88.50

%

Construction and land development, non-owner occupied commercial real estate and multi-family loans as a percentage of total capital(3)

 

258.00

%

 

259.00

%

 

261.10

%

Allowance for credit losses (ACL) to total loans

 

1.12

%

 

1.08

%

 

1.04

%

(1):

Annualized net loan charge-offs to average loans ratios are computed by annualizing quarterly net loan charge-offs and dividing the result by average loans for the quarter.

(2):

Classified assets as a percentage of Tier 1 capital plus allowance for credit losses.

(3):

Calculated using the same guidelines as are used in the Federal Financial Institutions Examination Council's Uniform Bank Performance Report.

  • The allowance and provision for credit losses both increased at March 31, 2024, over Dec. 31, 2023, and March 31, 2023, to account for incremental weakness of a certain borrower as well as better position the firm to navigate the credit implications of a higher-for-longer interest rate environment.
  • Nonperforming assets increased at March 31, 2024, over Dec. 31, 2023, and March 31, 2023, primarily as a result of downgrading of two loans, one in the Company's construction portfolio and another in its C&I portfolio, each experiencing cash flow challenges at this time.
  • Both of the firm’s ratios associated with construction and land development and CRE loans in comparison to total capital decreased from the prior quarter. Importantly, and consistent with the firm’s target of achieving a threshold of below 70 percent, the firm’s ratio of construction and land development in relation to total capital at March 31, 2024 showed continued progress and decreased to 77.5 percent.

"Net charge-offs to average loans for the first quarter of 2024 increased during the quarter to 0.20 percent from 0.17 percent in the prior quarter," Carpenter said. "We also experienced modest increases in nonperforming loans in relation to total loans and, conversely, we experienced improvement in similar ratios for past dues and potential problem loans. Net charge-offs at 0.20 percent compare favorably to longer-term historical levels, as do our ratios for nonperforming assets, past dues and potential problem loans. That said, we strive to be diligent with respect to monitoring our entire loan portfolio. A higher-for-longer rate environment coupled with stubborn inflation has required banks to maintain a higher level of caution with respect to credit. Accordingly, we now estimate net charge-offs for the firm may range between 0.20 percent and 0.25 percent of average loans for 2024.

"Also, during the quarter, we experienced an increase in book value per common share from $75.80 to $76.23, an annualized linked-quarter increase of 2.3 percent and an increase in tangible book value per common share from $51.38 at Dec. 31, 2023 to $51.98 at March 31, 2024, an annualized linked-quarter increase of 4.7 percent. As we've previously communicated, increasing our tangible book value per common share remains an important priority for our firm’s leadership."

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. CDT on April 23, 2024, to discuss first quarter 2024 results and other matters. To access the call for audio only, please call 1-877-209-7255. For the presentation and streaming audio, please access the webcast on the investor relations page of Pinnacle's website at www.pnfp.com.

For those unable to participate in the webcast, it will be archived on the investor relations page of Pinnacle's website at www.pnfp.com for 90 days following the presentation.

Pinnacle Financial Partners provides a full range of banking, investment, trust, mortgage and insurance products and services designed for businesses and their owners and individuals interested in a comprehensive relationship with their financial institution. The firm is the No. 1 and fastest growing bank in the Nashville-Murfreesboro-Franklin MSA, according to 2023 deposit data from the FDIC. Pinnacle is No. 11 on the 2024 list of 100 Best Companies to Work For® in the U.S., its eighth consecutive appearance and was recognized by American Banker as one of America's Best Banks to Work For 11 years in a row and No. 1 among banks with more than $10 billion in assets in 2023.

Pinnacle Bank owns a 49 percent interest in Bankers Healthcare Group (BHG), which provides innovative, hassle-free financial solutions to healthcare practitioners and other professionals. Great Place to Work and FORTUNE ranked BHG No. 4 on its 2021 list of Best Workplaces in New York State in the small/medium business category.

The firm began operations in a single location in downtown Nashville, TN in October 2000 and has since grown to approximately $48.9 billion in assets as of March 31, 2024. As the second-largest bank holding company in Tennessee, Pinnacle operates in several primarily urban markets across the Southeast.

Additional information concerning Pinnacle, which is included in the Nasdaq Financial-100 Index, can be accessed at www.pnfp.com.

Forward-Looking Statements

All statements, other than statements of historical fact, included in this press release, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "expect," "anticipate," "intend," "may," "should," "plan," "believe," "seek," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (i) deterioration in the financial condition of borrowers of Pinnacle Bank and its subsidiaries or BHG, including as a result of the negative impact of inflationary pressures and challenging economic conditions on our and BHG's customers and their businesses, resulting in significant increases in loan losses and provisions for those losses and, in the case of BHG, substitutions; (ii) fluctuations or differences in interest rates on loans or deposits from those that Pinnacle Financial is modeling or anticipating, including as a result of Pinnacle Bank's inability to better match deposit rates with the changes in the short-term rate environment, or that affect the yield curve; (iii) the sale of investment securities in a loss position before their value recovers, including as a result of asset liability management strategies or in response to liquidity needs; (iv) adverse conditions in the national or local economies including in Pinnacle Financial's markets throughout the Southeast region of the United States, particularly in commercial and residential real estate markets; (v) the inability of Pinnacle Financial, or entities in which it has significant investments, like BHG, to maintain the long-term historical growth rate of its, or such entities', loan portfolio; (vi) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, including during times when Pinnacle Bank is seeking to limit the rates it pays on deposits or uncertainty exists in the financial services sector; (vii) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (viii) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (ix) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Pinnacle Financial’s results, including as a result of the negative impact to net interest margin from rising deposit and other funding costs; (x) the results of regulatory examinations of Pinnacle Financial, Pinnacle Bank or BHG, or companies with whom they do business; (xi) BHG's ability to profitably grow its business and successfully execute on its business plans; (xii) risks of expansion into new geographic or product markets; (xiii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including goodwill or other intangible assets; (xiv) the ineffectiveness of Pinnacle Bank's hedging strategies, or the unexpected counterparty failure or hedge failure of the underlying hedges; (xv) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Bank), to retain financial advisors (including as a result of the competitive environment for associates) or otherwise to attract customers from other financial institutions; (xvi) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvii) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels or regulatory requests or directives, particularly if Pinnacle Bank's level of applicable commercial real estate loans were to exceed percentage levels of total capital in guidelines recommended by its regulators; (xviii) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xix) the vulnerability of Pinnacle Bank's network and online banking portals, and the systems of parties with whom Pinnacle Bank contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xx) the possibility of increased compliance and operational costs as a result of increased regulatory oversight (including by the Consumer Financial Protection Bureau), including oversight of companies in which Pinnacle Financial or Pinnacle Bank have significant investments, like BHG, and the development of additional banking products for Pinnacle Bank's corporate and consumer clients; (xxi) Pinnacle Financial's ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions; (xxii) difficulties and delays in integrating acquired businesses or fully realizing costs savings and other benefits from acquisitions; (xxiii) the risks associated with Pinnacle Bank being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company or all or a portion of their ownership interests in BHG (triggering a similar sale by Pinnacle Bank); (xxiv) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxv) fluctuations in the valuations of Pinnacle Financial's equity investments and the ultimate success of such investments; (xxvi) the availability of and access to capital; (xxvii) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions involving Pinnacle Financial, Pinnacle Bank or BHG; and (xxviii) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements can be found in Pinnacle Financial's Annual Report on Form 10-K for the year ended December 31, 2023, and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC and available on the SEC's website at http://www.sec.gov. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this press release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Matters

This release contains certain non-GAAP financial measures, including, without limitation, total revenues, net income to common shareholders, earnings per diluted common share, revenue per diluted common share, PPNR, efficiency ratio, noninterest expense, noninterest income and the ratio of noninterest expense to average assets, excluding in certain instances the impact of expenses related to other real estate owned, gains or losses on sale of investment securities, gains associated with the sale-leaseback transaction completed in the second quarter of 2023, losses on the restructuring of certain BOLI contracts, charges related to the FDIC special assessment, income associated with the recognition of a mortgage servicing asset in the first quarter of 2024 and other matters for the accounting periods presented. This release may also contain certain other non-GAAP capital ratios and performance measures that exclude the impact of goodwill and core deposit intangibles associated with Pinnacle Financial's acquisitions of BNC, Avenue Bank, Magna Bank, CapitalMark Bank & Trust, Mid-America Bancshares, Inc., Cavalry Bancorp, Inc. and other acquisitions which collectively are less material to the non-GAAP measure as well as the impact of Pinnacle Financial's Series B Preferred Stock. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Because non-GAAP financial measures presented in this release are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies.

Pinnacle Financial believes that these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of its operating performance. In addition, because intangible assets such as goodwill and the core deposit intangible, and the other items excluded each vary extensively from company to company, Pinnacle Financial believes that the presentation of this information allows investors to more easily compare Pinnacle Financial's results to the results of other companies. Pinnacle Financial's management utilizes this non-GAAP financial information to compare Pinnacle Financial's operating performance for 2024 versus certain periods in 2023 and to internally prepared projections.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – UNAUDITED

 

 

 

 

(dollars in thousands, except for share and per share data)

March 31, 2024

December 31, 2023

March 31, 2023

ASSETS

 

 

 

Cash and noninterest-bearing due from banks

$

175,826

 

$

228,620

 

$

209,255

 

Restricted cash

 

58,285

 

 

86,873

 

 

13,049

 

Interest-bearing due from banks

 

2,472,250

 

 

1,914,856

 

 

2,597,172

 

Cash and cash equivalents

 

2,706,361

 

 

2,230,349

 

 

2,819,476

 

Securities purchased with agreement to resell

 

554,022

 

 

558,009

 

 

509,872

 

Securities available-for-sale, at fair value

 

4,378,718

 

 

4,317,530

 

 

3,825,203

 

Securities held-to-maturity (fair value of $2.7 billion, $2.8 billion, and $2.8 billion, net of allowance for credit losses of $1.7 million, $1.7 million, and $1.9 million at March 31, 2024, Dec. 31, 2023, and March 31, 2023, respectively)

 

2,993,129

 

 

3,006,357

 

 

3,053,628

 

Consumer loans held-for-sale

 

104,586

 

 

104,217

 

 

58,758

 

Commercial loans held-for-sale

 

6,068

 

 

9,280

 

 

23,087

 

Loans

 

33,162,873

 

 

32,676,091

 

 

30,297,871

 

Less allowance for credit losses

 

(371,337

)

 

(353,055

)

 

(313,841

)

Loans, net

 

32,791,536

 

 

32,323,036

 

 

29,984,030

 

Premises and equipment, net

 

265,579

 

 

256,877

 

 

354,713

 

Equity method investment

 

457,657

 

 

445,223

 

 

438,303

 

Accrued interest receivable

 

219,887

 

 

217,491

 

 

143,965

 

Goodwill

 

1,846,973

 

 

1,846,973

 

 

1,846,973

 

Core deposits and other intangible assets

 

25,881

 

 

27,465

 

 

32,761

 

Other real estate owned

 

2,766

 

 

3,937

 

 

7,802

 

Other assets

 

2,541,033

 

 

2,613,139

 

 

2,021,016

 

Total assets

$

48,894,196

 

$

47,959,883

 

$

45,119,587

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Deposits:

 

 

 

Noninterest-bearing

$

7,958,739

 

$

7,906,502

 

$

9,018,439

 

Interest-bearing

 

12,178,471

 

 

11,365,349

 

 

8,944,353

 

Savings and money market accounts

 

14,761,573

 

 

14,427,206

 

 

14,136,850

 

Time

 

4,503,242

 

 

4,840,753

 

 

4,078,911

 

Total deposits

 

39,402,025

 

 

38,539,810

 

 

36,178,553

 

Securities sold under agreements to repurchase

 

201,418

 

 

209,489

 

 

149,777

 

Federal Home Loan Bank advances

 

2,116,417

 

 

2,138,169

 

 

2,166,508

 

Subordinated debt and other borrowings

 

425,159

 

 

424,938

 

 

424,276

 

Accrued interest payable

 

58,069

 

 

66,967

 

 

31,728

 

Other liabilities

 

587,257

 

 

544,722

 

 

484,617

 

Total liabilities

 

42,790,345

 

 

41,924,095

 

 

39,435,459

 

Preferred stock, no par value, 10.0 million shares authorized; 225,000 shares non-cumulative perpetual preferred stock, Series B, liquidation preference $225.0 million, issued and outstanding at March 31, 2024, Dec. 31, 2023, and March 31, 2023, respectively

 

217,126

 

 

217,126

 

 

217,126

 

Common stock, par value $1.00; 180.0 million shares authorized; 77.2 million, 76.8 million and 76.7 million shares issued and outstanding at March 31, 2024, Dec. 31, 2023, and March 31, 2023, respectively

 

77,219

 

 

76,767

 

 

76,739

 

Additional paid-in capital

 

3,100,817

 

 

3,109,493

 

 

3,079,020

 

Retained earnings

 

2,887,804

 

 

2,784,927

 

 

2,458,006

 

Accumulated other comprehensive loss, net of taxes

 

(179,115

)

 

(152,525

)

 

(146,763

)

Total shareholders' equity

 

6,103,851

 

 

6,035,788

 

 

5,684,128

 

Total liabilities and shareholders' equity

$

48,894,196

 

$

47,959,883

 

$

45,119,587

 

This information is preliminary and based on company data available at the time of the presentation.

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED

(dollars in thousands, except for share and per share data)

Three months ended

 

March 31, 2024

December 31, 2023

March 31, 2023

Interest income:

 

 

 

Loans, including fees

$

541,199

 

$

530,604

 

$

431,902

 

Securities

 

 

 

Taxable

 

44,470

 

 

42,458

 

 

29,358

 

Tax-exempt

 

24,600

 

 

25,035

 

 

23,802

 

Federal funds sold and other

 

40,214

 

 

46,699

 

 

20,977

 

Total interest income

 

650,483

 

 

644,796

 

 

506,039

 

Interest expense:

 

 

 

Deposits

 

300,968

 

 

297,556

 

 

176,589

 

Securities sold under agreements to repurchase

 

1,399

 

 

1,295

 

 

595

 

FHLB advances and other borrowings

 

30,082

 

 

28,693

 

 

16,624

 

Total interest expense

 

332,449

 

 

327,544

 

 

193,808

 

Net interest income

 

318,034

 

 

317,252

 

 

312,231

 

Provision for credit losses

 

34,497

 

 

16,314

 

 

18,767

 

Net interest income after provision for credit losses

 

283,537

 

 

300,938

 

 

293,464

 

Noninterest income:

 

 

 

Service charges on deposit accounts

 

13,439

 

 

12,660

 

 

11,718

 

Investment services

 

14,751

 

 

13,410

 

 

11,595

 

Insurance sales commissions

 

3,852

 

 

3,072

 

 

4,464

 

Gains on mortgage loans sold, net

 

2,879

 

 

879

 

 

2,053

 

Investment gains on sales, net

 

 

 

14

 

 

 

Trust fees

 

7,415

 

 

6,987

 

 

6,429

 

Income from equity method investment

 

16,035

 

 

14,432

 

 

19,079

 

Gain on sale of fixed assets

 

58

 

 

102

 

 

135

 

Other noninterest income

 

51,674

 

 

27,532

 

 

34,056

 

Total noninterest income

 

110,103

 

 

79,088

 

 

89,529

 

Noninterest expense:

 

 

 

Salaries and employee benefits

 

146,010

 

 

133,333

 

 

135,708

 

Equipment and occupancy

 

39,646

 

 

38,021

 

 

30,353

 

Other real estate, net

 

84

 

 

125

 

 

99

 

Marketing and other business development

 

6,125

 

 

6,829

 

 

5,942

 

Postage and supplies

 

2,771

 

 

2,840

 

 

2,819

 

Amortization of intangibles

 

1,584

 

 

1,751

 

 

1,794

 

Other noninterest expense

 

46,145

 

 

68,269

 

 

35,012

 

Total noninterest expense

 

242,365

 

 

251,168

 

 

211,727

 

Income before income taxes

 

151,275

 

 

128,858

 

 

171,266

 

Income tax expense

 

27,331

 

 

33,879

 

 

33,995

 

Net income

 

123,944

 

 

94,979

 

 

137,271

 

Preferred stock dividends

 

(3,798

)

 

(3,798

)

 

(3,798

)

Net income available to common shareholders

$

120,146

 

$

91,181

 

$

133,473

 

Per share information:

 

 

 

Basic net income per common share

$

1.58

 

$

1.20

 

$

1.76

 

Diluted net income per common share

$

1.57

 

$

1.19

 

$

1.76

 

Weighted average common shares outstanding:

 

 

 

Basic

 

76,278,453

 

 

76,068,016

 

 

75,921,282

 

Diluted

 

76,428,885

 

 

76,823,991

 

 

76,042,328

 

This information is preliminary and based on company data available at the time of the presentation.

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

 

(dollars and shares in thousands)

Preferred

Stock

Amount

Common Stock

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comp. Income (Loss), net

Total Shareholders' Equity

 

Shares

Amounts

Balance at December 31, 2022

$

217,126

76,454

 

$

76,454

 

$

3,074,867

 

$

2,341,706

 

$

(190,761

)

$

5,519,392

 

Exercise of employee common stock options & related tax benefits

 

40

 

 

40

 

 

920

 

 

 

 

 

 

960

 

Preferred dividends paid ($16.88 per share)

 

 

 

 

 

 

 

(3,798

)

 

 

 

(3,798

)

Common dividends paid ($0.22 per share)

 

 

 

 

 

 

 

(17,173

)

 

 

(17,173

)

Issuance of restricted common shares, net of forfeitures

 

193

 

 

193

 

 

(193

)

 

 

 

 

 

 

Restricted shares withheld for taxes & related tax benefits

 

(41

)

 

(41

)

 

(3,035

)

 

 

 

 

 

(3,076

)

Issuance of common stock pursuant to restricted stock unit (RSU) and performance stock unit (PSU) agreements, net of shares withheld for taxes & related tax benefits

 

93

 

 

93

 

 

(3,738

)

 

 

 

 

 

(3,645

)

Compensation expense for restricted shares & performance stock units

 

 

 

 

 

10,199

 

 

 

 

 

 

10,199

 

Net income

 

 

 

 

 

 

 

137,271

 

 

 

 

137,271

 

Other comprehensive gain

 

 

 

 

 

 

 

 

 

43,998

 

 

43,998

 

Balance at March 31, 2023

$

217,126

76,739

 

$

76,739

 

$

3,079,020

 

$

2,458,006

 

$

(146,763

)

$

5,684,128

 

 

 

 

 

 

 

 

 

Balance at December 31, 2023

$

217,126

76,767

 

$

76,767

 

$

3,109,493

 

$

2,784,927

 

$

(152,525

)

$

6,035,788

 

Exercise of employee common stock options & related tax benefits

 

 

 

 

 

 

 

 

 

 

 

 

Preferred dividends paid ($16.88 per share)

 

 

 

 

 

 

 

(3,798

)

 

 

 

(3,798

)

Common dividends paid ($0.22 per share)

 

 

 

 

 

 

 

(17,269

)

 

 

 

(17,269

)

Issuance of restricted common shares, net of forfeitures

 

190

 

 

190

 

 

(190

)

 

 

 

 

 

 

Restricted shares withheld for taxes & related tax benefits

 

(49

)

 

(49

)

 

(4,088

)

 

 

 

 

 

(4,137

)

Issuance of common stock pursuant to RSU and PSU agreements, net of shares withheld for taxes & related tax benefits

 

311

 

 

311

 

 

(14,738

)

 

 

 

 

 

(14,427

)

Compensation expense for restricted shares & performance stock units

 

 

 

 

 

10,340

 

 

 

 

 

 

10,340

 

Net income

 

 

 

 

 

 

 

123,944

 

 

 

 

123,944

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

(26,590

)

 

(26,590

)

Balance at March 31, 2024

$

217,126

77,219

 

$

77,219

 

$

3,100,817

 

$

2,887,804

 

$

(179,115

)

$

6,103,851

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

 

 

 

 

 

 

(dollars in thousands)

March

December

September

June

March

December

2024

2023

2023

2023

2023

2022

Balance sheet data, at quarter end:

 

 

 

 

 

 

Commercial and industrial loans

$

11,893,198

 

11,666,691

 

11,307,611

 

10,983,911

 

10,723,327

 

10,241,362

 

Commercial real estate - owner occupied loans

 

4,044,973

 

4,044,896

 

3,944,616

 

3,845,359

 

3,686,796

 

3,587,257

 

Commercial real estate - investment loans

 

6,138,711

 

5,929,595

 

5,957,426

 

5,682,652

 

5,556,484

 

5,277,454

 

Commercial real estate - multifamily and other loans

 

1,924,931

 

1,605,899

 

1,490,184

 

1,488,236

 

1,331,249

 

1,265,165

 

Consumer real estate - mortgage loans

 

4,828,416

 

4,851,531

 

4,768,780

 

4,692,673

 

4,531,285

 

4,435,046

 

Construction and land development loans

 

3,818,334

 

4,041,081

 

3,942,143

 

3,904,774

 

3,909,024

 

3,679,498

 

Consumer and other loans

 

514,310

 

536,398

 

532,524

 

555,685

 

559,706

 

555,823

 

Total loans

 

33,162,873

 

32,676,091

 

31,943,284

 

31,153,290

 

30,297,871

 

29,041,605

 

Allowance for credit losses

 

(371,337

)

(353,055

)

(346,192

)

(337,459

)

(313,841

)

(300,665

)

Securities

 

7,371,847

 

7,323,887

 

6,882,276

 

6,623,457

 

6,878,831

 

6,637,920

 

Total assets

 

48,894,196

 

47,959,883

 

47,523,790

 

46,875,982

 

45,119,587

 

41,970,021

 

Noninterest-bearing deposits

 

7,958,739

 

7,906,502

 

8,324,325

 

8,436,799

 

9,018,439

 

9,812,744

 

Total deposits

 

39,402,025

 

38,539,810

 

38,295,809

 

37,722,661

 

36,178,553

 

34,961,238

 

Securities sold under agreements to repurchase

 

201,418

 

209,489

 

195,999

 

163,774

 

149,777

 

194,910

 

FHLB advances

 

2,116,417

 

2,138,169

 

2,110,598

 

2,200,917

 

2,166,508

 

464,436

 

Subordinated debt and other borrowings

 

425,159

 

424,938

 

424,718

 

424,497

 

424,276

 

424,055

 

Total shareholders' equity

 

6,103,851

 

6,035,788

 

5,837,641

 

5,843,759

 

5,684,128

 

5,519,392

 

Balance sheet data, quarterly averages:

 

 

 

 

 

 

Total loans

$

33,041,954

 

32,371,506

 

31,529,854

 

30,882,205

 

29,633,640

 

28,402,197

 

Securities

 

7,307,201

 

6,967,488

 

6,801,285

 

6,722,247

 

6,765,126

 

6,537,262

 

Federal funds sold and other

 

3,274,062

 

3,615,908

 

4,292,956

 

3,350,705

 

2,100,757

 

1,828,588

 

Total earning assets

 

43,623,217

 

42,954,902

 

42,624,095

 

40,955,157

 

38,499,523

 

36,768,047

 

Total assets

 

48,311,260

 

47,668,519

 

47,266,199

 

45,411,961

 

42,983,854

 

41,324,251

 

Noninterest-bearing deposits

 

7,962,217

 

8,342,572

 

8,515,733

 

8,599,781

 

9,332,317

 

10,486,233

 

Total deposits

 

38,995,709

 

38,515,560

 

38,078,665

 

36,355,859

 

35,291,775

 

34,177,281

 

Securities sold under agreements to repurchase

 

210,888

 

202,601

 

184,681

 

162,429

 

219,082

 

199,610

 

FHLB advances

 

2,214,489

 

2,112,809

 

2,132,638

 

2,352,045

 

1,130,356

 

701,813

 

Subordinated debt and other borrowings

 

428,281

 

426,999

 

426,855

 

426,712

 

426,564

 

427,503

 

Total shareholders' equity

 

6,082,616

 

5,889,075

 

5,898,196

 

5,782,239

 

5,605,604

 

5,433,274

 

Statement of operations data, for the three months ended:

Interest income

$

650,483

 

644,796

 

627,294

 

575,239

 

506,039

 

451,178

 

Interest expense

 

332,449

 

327,544

 

310,052

 

259,846

 

193,808

 

131,718

 

Net interest income

 

318,034

 

317,252

 

317,242

 

315,393

 

312,231

 

319,460

 

Provision for credit losses

 

34,497

 

16,314

 

26,826

 

31,689

 

18,767

 

24,805

 

Net interest income after provision for credit losses

 

283,537

 

300,938

 

290,416

 

283,704

 

293,464

 

294,655

 

Noninterest income

 

110,103

 

79,088

 

90,797

 

173,839

 

89,529

 

82,321

 

Noninterest expense

 

242,365

 

251,168

 

213,233

 

211,641

 

211,727

 

202,047

 

Income before income taxes

 

151,275

 

128,858

 

167,980

 

245,902

 

171,266

 

174,929

 

Income tax expense

 

27,331

 

33,879

 

35,377

 

48,603

 

33,995

 

37,082

 

Net income

 

123,944

 

94,979

 

132,603

 

197,299

 

137,271

 

137,847

 

Preferred stock dividends

 

(3,798

)

(3,798

)

(3,798

)

(3,798

)

(3,798

)

(3,798

)

Net income available to common shareholders

$

120,146

 

91,181

 

128,805

 

193,501

 

133,473

 

134,049

 

Profitability and other ratios:

 

 

 

 

 

 

Return on avg. assets (1)

 

1.00

%

0.76

%

1.08

%

1.71

%

1.26

%

1.29

%

Return on avg. equity (1)

 

7.94

%

6.14

%

8.66

%

13.42

%

9.66

%

9.79

%

Return on avg. common equity (1)

 

8.24

%

6.38

%

9.00

%

13.95

%

10.05

%

10.20

%

Return on avg. tangible common equity (1)

 

12.11

%

9.53

%

13.43

%

21.06

%

15.43

%

15.95

%

Common stock dividend payout ratio (14)

 

12.59

%

12.26

%

11.35

%

11.04

%

12.07

%

12.26

%

Net interest margin (2)

 

3.04

%

3.06

%

3.06

%

3.20

%

3.40

%

3.60

%

Noninterest income to total revenue (3)

 

25.72

%

19.95

%

22.25

%

35.53

%

22.28

%

20.49

%

Noninterest income to avg. assets (1)

 

0.92

%

0.66

%

0.76

%

1.54

%

0.84

%

0.79

%

Noninterest exp. to avg. assets (1)

 

2.02

%

2.09

%

1.79

%

1.87

%

2.00

%

1.94

%

Efficiency ratio (4)

 

56.61

%

63.37

%

52.26

%

43.26

%

52.70

%

50.29

%

Avg. loans to avg. deposits

 

84.73

%

84.05

%

82.80

%

84.94

%

83.97

%

83.10

%

Securities to total assets

 

15.08

%

15.27

%

14.48

%

14.13

%

15.25

%

15.82

%

This information is preliminary and based on company data available at the time of the presentation.

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED

 

 

 

 

(dollars in thousands)

Three months ended

 

Three months ended

March 31, 2024

 

March 31, 2023

 

Average

Balances

Interest

Rates/

Yields

 

Average

Balances

Interest

Rates/

Yields

Interest-earning assets

 

 

 

 

 

 

 

Loans (1) (2)

$

33,041,954

$

541,199

6.67

%

 

$

29,633,640

$

431,902

 

6.00

%

Securities

 

 

 

 

 

 

 

Taxable

 

3,919,534

 

44,470

4.56

%

 

 

3,508,946

 

29,358

 

3.39

%

Tax-exempt (2)

 

3,387,667

 

24,600

3.48

%

 

 

3,256,180

 

23,802

 

3.54

%

Interest-bearing due from banks

 

2,476,800

 

32,753

5.32

%

 

 

1,392,492

 

15,941

 

4.64

%

Resell agreements

 

543,788

 

3,858

2.85

%

 

 

512,660

 

3,329

 

2.63

%

Federal funds sold

 

 

%

 

 

 

(9

)

%

Other

 

253,474

 

3,603

5.72

%

 

 

195,605

 

1,716

 

3.56

%

Total interest-earning assets

 

43,623,217

$

650,483

6.11

%

 

 

38,499,523

$

506,039

 

5.45

%

Nonearning assets

 

 

 

 

 

 

 

Intangible assets

 

1,873,871

 

 

 

 

1,880,890

 

 

Other nonearning assets

 

2,814,172

 

 

 

 

2,603,441

 

 

Total assets

$

48,311,260

 

 

 

$

42,983,854

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest checking

 

11,567,773

 

112,728

3.92

%

 

 

7,793,823

 

52,474

 

2.73

%

Savings and money market

 

14,608,687

 

134,752

3.71

%

 

 

14,377,996

 

97,519

 

2.75

%

Time

 

4,857,032

 

53,488

4.43

%

 

 

3,787,639

 

26,596

 

2.85

%

Total interest-bearing deposits

 

31,033,492

 

300,968

3.90

%

 

 

25,959,458

 

176,589

 

2.76

%

Securities sold under agreements to repurchase

 

210,888

 

1,399

2.67

%

 

 

219,082

 

595

 

1.10

%

Federal Home Loan Bank advances

 

2,214,489

 

24,120

4.38

%

 

 

1,130,356

 

10,970

 

3.94

%

Subordinated debt and other borrowings

 

428,281

 

5,962

5.60

%

 

 

426,564

 

5,654

 

5.38

%

Total interest-bearing liabilities

 

33,887,150

 

332,449

3.95

%

 

 

27,735,460

 

193,808

 

2.83

%

Noninterest-bearing deposits

 

7,962,217

 

 

 

 

9,332,317

 

 

 

Total deposits and interest-bearing liabilities

 

41,849,367

$

332,449

3.20

%

 

 

37,067,777

$

193,808

 

2.12

%

Other liabilities

 

379,277

 

 

 

 

310,473

 

 

Shareholders' equity

 

6,082,616

 

 

 

 

5,605,604

 

 

Total liabilities and shareholders' equity

$

48,311,260

 

 

 

$

42,983,854

 

 

Net interest income

 

$

318,034

 

 

 

$

312,231

 

 

Net interest spread (3)

 

 

2.16

%

 

 

 

2.61

%

Net interest margin (4)

 

 

3.04

%

 

 

 

3.40

%

 

 

 

 

 

 

 

 

(1) Average balances of nonperforming loans are included in the above amounts.

(2) Yields computed on tax-exempt instruments on a tax equivalent basis and included $11.8 million of taxable equivalent income for the three months ended March 31, 2024 compared to $10.9 million for the three months ended March 31, 2023. The tax-exempt benefit has been reduced by the projected impact of tax-exempt income that will be disallowed pursuant to IRS Regulations as of and for the then current period presented.

(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the three months ended March 31, 2024 would have been 2.91% compared to a net interest spread of 3.32% for the three months ended March 31, 2023.

(4) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.

 

 

 

This information is preliminary and based on company data available at the time of the presentation.

 

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

 

 

 

 

 

 

(dollars in thousands)

March

December

September

June

March

December

2024

2023

2023

2023

2023

2022

Asset quality information and ratios:

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

Nonaccrual loans

$

108,325

 

82,288

 

42,950

 

44,289

 

36,988

 

38,116

 

ORE and other nonperforming assets (NPAs)

 

2,766

 

4,347

 

3,019

 

3,105

 

7,802

 

7,952

 

Total nonperforming assets

$

111,091

 

86,635

 

45,969

 

47,394

 

44,790

 

46,068

 

Past due loans over 90 days and still accruing interest

$

5,273

 

6,004

 

4,969

 

5,257

 

5,284

 

4,406

 

Accruing purchase credit deteriorated loans

$

6,222

 

6,501

 

7,010

 

7,415

 

7,684

 

8,060

 

Net loan charge-offs

$

16,215

 

13,451

 

18,093

 

9,771

 

7,291

 

11,729

 

Allowance for credit losses to nonaccrual loans

 

342.8

%

429.0

%

806.0

%

762.0

%

848.5

%

788.8

%

As a percentage of total loans:

 

 

 

 

 

 

Past due accruing loans over 30 days

 

0.17

%

0.23

%

0.16

%

0.14

%

0.14

%

0.15

%

Potential problem loans

 

0.28

%

0.39

%

0.42

%

0.32

%

0.22

%

0.19

%

Allowance for credit losses

 

1.12

%

1.08

%

1.08

%

1.08

%

1.04

%

1.04

%

Nonperforming assets to total loans, ORE and other NPAs

 

0.33

%

0.27

%

0.14

%

0.15

%

0.15

%

0.16

%

Classified asset ratio (Pinnacle Bank) (6)

 

4.9

%

5.2

%

4.6

%

3.3

%

2.7

%

2.4

%

Annualized net loan charge-offs to avg. loans (5)

 

0.20

%

0.17

%

0.23

%

0.13

%

0.10

%

0.17

%

 

 

 

 

 

 

 

Interest rates and yields:

 

 

 

 

 

 

Loans

 

6.67

%

6.62

%

6.50

%

6.30

%

6.00

%

5.54

%

Securities

 

4.06

%

4.12

%

3.81

%

3.66

%

3.47

%

3.19

%

Total earning assets

 

6.11

%

6.09

%

5.95

%

5.74

%

5.45

%

5.02

%

Total deposits, including non-interest bearing

 

3.10

%

3.07

%

2.92

%

2.52

%

2.03

%

1.40

%

Securities sold under agreements to repurchase

 

2.67

%

2.54

%

2.30

%

1.93

%

1.10

%

0.94

%

FHLB advances

 

4.38

%

4.26

%

4.22

%

4.20

%

3.94

%

3.04

%

Subordinated debt and other borrowings

 

5.60

%

5.59

%

5.54

%

5.44

%

5.38

%

4.98

%

Total deposits and interest-bearing liabilities

 

3.20

%

3.15

%

3.01

%

2.65

%

2.12

%

1.47

%

 

 

 

 

 

 

 

Capital and other ratios (6):

 

 

 

 

 

 

Pinnacle Financial ratios:

 

 

 

 

 

 

Shareholders' equity to total assets

 

12.5

%

12.6

%

12.3

%

12.5

%

12.6

%

13.2

%

Common equity Tier one

 

10.4

%

10.3

%

10.3

%

10.2

%

9.9

%

10.0

%

Tier one risk-based

 

10.9

%

10.8

%

10.9

%

10.8

%

10.5

%

10.5

%

Total risk-based

 

12.9

%

12.7

%

12.8

%

12.7

%

12.4

%

12.4

%

Leverage

 

9.5

%

9.4

%

9.4

%

9.5

%

9.6

%

9.7

%

Tangible common equity to tangible assets

 

8.5

%

8.6

%

8.2

%

8.3

%

8.3

%

8.5

%

Pinnacle Bank ratios:

 

 

 

 

 

 

Common equity Tier one

 

11.3

%

11.1

%

11.2

%

11.1

%

10.8

%

10.9

%

Tier one risk-based

 

11.3

%

11.1

%

11.2

%

11.1

%

10.8

%

10.9

%

Total risk-based

 

12.2

%

12.0

%

12.0

%

11.9

%

11.6

%

11.6

%

Leverage

 

9.7

%

9.7

%

9.7

%

9.8

%

9.9

%

10.1

%

Construction and land development loans

as a percentage of total capital (17)

 

77.5

%

84.2

%

83.1

%

84.5

%

88.5

%

85.9

%

Non-owner occupied commercial real estate and

multi-family as a percentage of total capital (17)

 

258.0

%

259.0

%

256.4

%

256.7

%

261.1

%

249.6

%

 

 

 

 

 

 

 

This information is preliminary and based on company data available at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

 

 

 

 

 

 

 

(dollars in thousands, except per share data)

 

March

December

September

June

March

December

 

2024

2023

2023

2023

2023

2022

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

Earnings per common share – basic

$

1.58

 

1.20

 

1.69

 

2.55

 

1.76

 

1.77

 

Earnings per common share - basic, excluding non-GAAP adjustments

$

1.54

 

1.70

 

1.79

 

1.80

 

1.76

 

1.77

 

Earnings per common share – diluted

$

1.57

 

1.19

 

1.69

 

2.54

 

1.76

 

1.76

 

Earnings per common share - diluted, excluding non-GAAP adjustments

$

1.53

 

1.68

 

1.79

 

1.79

 

1.76

 

1.76

 

Common dividends per share

$

0.22

 

0.22

 

0.22

 

0.22

 

0.22

 

0.22

 

Book value per common share at quarter end (7)

$

76.23

 

75.80

 

73.23

 

73.32

 

71.24

 

69.35

 

Tangible book value per common share at quarter end (7)

$

51.98

 

51.38

 

48.78

 

48.85

 

46.75

 

44.74

 

Revenue per diluted common share

$

5.60

 

5.16

 

5.35

 

6.43

 

5.28

 

5.27

 

Revenue per diluted common share, excluding non-GAAP adjustments

$

5.45

 

5.25

 

5.48

 

5.43

 

5.28

 

5.27

 

 

 

 

 

 

 

 

 

Investor information:

 

 

 

 

 

 

 

Closing sales price of common stock on last trading day of quarter

$

85.88

 

87.22

 

67.04

 

56.65

 

55.16

 

73.40

 

High closing sales price of common stock during quarter

$

91.82

 

89.34

 

75.95

 

57.93

 

82.79

 

87.81

 

Low closing sales price of common stock during quarter

$

79.26

 

60.77

 

56.41

 

46.17

 

52.51

 

70.74

 

 

 

 

 

 

 

 

 

Closing sales price of depositary shares on last trading day of quarter

$

23.62

 

22.60

 

22.70

 

23.75

 

24.15

 

25.35

 

High closing sales price of depositary shares during quarter

$

24.44

 

23.65

 

23.85

 

24.90

 

25.71

 

25.60

 

Low closing sales price of depositary shares during quarter

$

22.71

 

21.00

 

21.54

 

19.95

 

20.77

 

23.11

 

 

 

 

 

 

 

 

 

Other information:

 

 

 

 

 

 

 

Residential mortgage loan sales:

 

 

 

 

 

 

 

Gross loans sold

$

148,576

 

142,556

 

198,247

 

192,948

 

120,146

 

134,514

 

Gross fees (8)

$

3,540

 

3,191

 

4,350

 

4,133

 

2,795

 

3,149

 

Gross fees as a percentage of loans originated

 

2.38

%

2.24

%

2.19

%

2.14

%

2.33

%

2.34

%

Net gain (loss) on residential mortgage loans sold

$

2,879

 

879

 

2,012

 

1,567

 

2,053

 

(65

)

Investment gains (losses) on sales of securities, net (13)

$

 

14

 

(9,727

)

(9,961

)

 

 

Brokerage account assets, at quarter end (9)

$

10,756,108

 

9,810,457

 

9,041,716

 

9,007,230

 

8,634,339

 

8,049,125

 

Trust account managed assets, at quarter end

$

6,297,887

 

5,530,495

 

5,047,128

 

5,084,592

 

4,855,951

 

4,560,752

 

Core deposits (10)

$

34,638,610

 

33,738,917

 

33,606,783

 

32,780,767

 

32,054,111

 

31,301,077

 

Core deposits to total funding (10)

 

82.2

%

81.7

%

81.9

%

80.9

%

82.4

%

86.8

%

Risk-weighted assets

$

40,531,311

 

40,205,295

 

39,527,086

 

38,853,588

 

38,117,659

 

36,216,901

 

Number of offices

 

128

 

128

 

128

 

127

 

126

 

123

 

Total core deposits per office

$

270,614

 

263,585

 

262,553

 

258,116

 

254,398

 

254,480

 

Total assets per full-time equivalent employee

$

14,438

 

14,287

 

14,274

 

14,166

 

13,750

 

12,948

 

Annualized revenues per full-time equivalent employee

$

508.5

 

468.4

 

486.2

 

593.0

 

496.5

 

491.8

 

Annualized expenses per full-time equivalent employee

$

287.8

 

296.8

 

254.1

 

256.5

 

261.7

 

247.3

 

Number of employees (full-time equivalent)

 

3,386.5

 

3,357.0

 

3,329.5

 

3,309.0

 

3,281.5

 

3,241.5

 

Associate retention rate (11)

 

94.2

%

94.2

%

93.6

%

94.1

%

93.8

%

93.8

%

 

 

 

 

 

 

 

 

This information is preliminary and based on company data available at the time of the presentation.

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

Three months ended

(dollars in thousands, except per share data)

March

December

March

2024

2023

2023

 

 

 

 

Net interest income

$

318,034

 

317,252

 

312,231

 

 

 

 

 

Noninterest income

 

110,103

 

79,088

 

89,529

 

Total revenues

 

428,137

 

396,340

 

401,760

 

Less: Investment losses (gains) on sales of securities, net

 

 

(14

)

 

Loss on BOLI restructuring

 

 

7,166

 

 

Recognition of mortgage servicing asset

 

(11,812

)

 

 

Total revenues excluding the impact of adjustments noted above

$

416,325

 

403,492

 

401,760

 

 

 

 

 

Noninterest expense

$

242,365

 

251,168

 

211,727

 

Less: ORE expense (benefit)

 

84

 

125

 

99

 

FDIC special assessment

 

7,250

 

29,000

 

 

Noninterest expense excluding the impact of adjustments noted above

$

235,031

 

222,043

 

211,628

 

 

 

 

 

Pre-tax income

$

151,275

 

128,858

 

171,266

 

Provision for credit losses

 

34,497

 

16,314

 

18,767

 

Pre-tax pre-provision net revenue

 

185,772

 

145,172

 

190,033

 

Less: Adjustments noted above

 

(4,478

)

36,277

 

99

 

Adjusted pre-tax pre-provision net revenue (12)

$

181,294

 

181,449

 

190,132

 

 

 

 

 

Noninterest income

$

110,103

 

79,088

 

89,529

 

Less: Adjustments noted above

 

(11,812

)

7,152

 

 

Noninterest income excluding the impact of adjustments noted above

$

98,291

 

86,240

 

89,529

 

 

 

 

 

Efficiency ratio (4)

 

56.61

%

63.37

%

52.70

%

Adjustments noted above

 

(0.16

)%

(8.34

)%

(0.02

)%

Efficiency ratio excluding adjustments noted above (4)

 

56.45

%

55.03

%

52.68

%

 

 

 

 

Total average assets

$

48,311,260

 

47,668,519

 

42,983,854

 

 

 

 

 

Noninterest income to average assets (1)

 

0.92

%

0.66

%

0.84

%

Less: Adjustments noted above

 

(0.10

)%

0.06

%

%

Noninterest income (excluding adjustments noted above) to average assets (1)

 

0.82

%

0.72

%

0.84

%

 

 

 

 

Noninterest expense to average assets (1)

 

2.02

%

2.09

%

2.00

%

Adjustments as noted above

 

(0.06

)%

(0.24

)%

%

Noninterest expense (excluding adjustments noted above) to average assets (1)

 

1.96

%

1.85

%

2.00

%

 

 

 

 

This information is preliminary and based on company data available at the time of the presentation.

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

 

RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

 

Three months ended

(dollars in thousands, except per share data)

March

December

September

June

March

December

 

2024

 

2023

 

2023

 

2023

 

2023

 

2022

 

Net income available to common shareholders

$

120,146

 

91,181

 

128,805

 

193,501

 

133,473

 

134,049

 

Investment (gains) losses on sales of securities, net

 

 

(14

)

9,727

 

9,961

 

 

 

Gain on sale of fixed assets as a result of sale-leaseback transaction

 

 

 

 

(85,692

)

 

 

Loss on BOLI restructuring

 

 

16,252

 

 

 

 

 

FDIC special assessment

 

7,250

 

29,000

 

 

 

 

 

ORE expense (benefit)

 

84

 

125

 

33

 

58

 

99

 

179

 

Recognition of mortgage servicing asset

 

(11,812

)

 

 

 

 

 

Tax effect on above noted adjustments (16)

 

1,120

 

(7,278

)

(2,440

)

18,918

 

(25

)

(47

)

Net income available to common shareholders excluding adjustments noted above

$

116,788

 

129,266

 

136,125

 

136,746

 

133,547

 

134,181

 

 

 

 

 

 

 

 

Basic earnings per common share

$

1.58

 

1.20

 

1.69

 

2.55

 

1.76

 

1.77

 

Less:

 

 

 

 

 

 

Investment (gains) losses on sales of securities, net

 

 

 

0.13

 

0.13

 

 

 

Gain on sale of fixed assets as a result of sale-leaseback transaction

 

 

 

 

(1.13

)

 

 

Loss on BOLI restructuring

 

 

0.21

 

 

 

 

 

FDIC special assessment

 

0.10

 

0.38

 

 

 

 

 

ORE expense (benefit)

 

 

 

 

 

 

 

Recognition of mortgage servicing asset

 

(0.15

)

 

 

 

 

 

Tax effect on above noted adjustments (16)

 

0.01

 

(0.10

)

(0.03

)

0.25

 

 

 

Basic earnings per common share excluding adjustments noted above

$

1.54

 

1.70

 

1.79

 

1.80

 

1.76

 

1.77

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

1.57

 

1.19

 

1.69

 

2.54

 

1.76

 

1.76

 

Less:

 

 

 

 

 

 

Investment (gains) losses on sales of securities, net

 

 

 

0.13

 

0.13

 

 

 

Gain on sale of fixed assets as a result of sale-leaseback transaction

 

 

 

 

(1.13

)

 

 

Loss on BOLI restructuring

 

 

0.21

 

 

 

 

 

FDIC special assessment

 

0.10

 

0.38

 

 

 

 

 

ORE expense (benefit)

 

 

 

 

 

 

 

Recognition of mortgage servicing asset

 

(0.15

)

 

 

 

 

 

Tax effect on above noted adjustments (16)

 

0.01

 

(0.09

)

(0.03

)

0.25

 

 

 

Diluted earnings per common share excluding the adjustments noted above

$

1.53

 

1.68

 

1.79

 

1.80

 

1.76

 

1.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue per diluted common share

$

5.60

 

5.16

 

5.35

 

6.43

 

5.28

 

5.27

 

Adjustments due to revenue-impacting items as noted above

 

(0.15

)

0.09

 

0.13

 

(1.00

)

 

 

Revenue per diluted common share excluding adjustments due to revenue-impacting items as noted above

$

5.45

 

5.25

 

5.48

 

5.43

 

5.28

 

5.27

 

 

 

 

 

 

 

 

Book value per common share at quarter end (7)

$

76.23

 

75.80

 

73.23

 

73.32

 

71.24

 

69.35

 

Adjustment due to goodwill, core deposit and other intangible assets

 

(24.25

)

(24.42

)

(24.45

)

(24.47

)

(24.49

)

(24.61

)

Tangible book value per common share at quarter end (7)

$

51.98

 

51.38

 

48.78

 

48.85

 

46.75

 

44.74

 

 

 

 

 

 

 

 

Equity method investment (15)

 

 

 

 

 

 

Fee income from BHG, net of amortization

$

16,035

 

14,432

 

24,967

 

26,924

 

19,079

 

21,005

 

Funding cost to support investment

 

5,974

 

5,803

 

6,546

 

6,005

 

5,768

 

5,438

 

Pre-tax impact of BHG

 

10,061

 

8,629

 

18,421

 

20,919

 

13,311

 

15,567

 

Income tax expense at statutory rates (16)

 

2,515

 

2,157

 

4,605

 

5,230

 

3,328

 

4,069

 

Earnings attributable to BHG

$

7,546

 

6,472

 

13,816

 

15,689

 

9,983

 

11,498

 

 

 

 

 

 

 

 

Basic earnings per common share attributable to BHG

$

0.10

 

0.09

 

0.18

 

0.21

 

0.13

 

0.15

 

Diluted earnings per common share attributable to BHG

$

0.10

 

0.08

 

0.18

 

0.21

 

0.13

 

0.15

 

 

 

 

 

 

 

 

This information is preliminary and based on company data available at the time of the presentation.

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

 

RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

Three months ended

 

(dollars in thousands, except per share data)

March

December

March

 

2024

2023

2023

 

 

 

 

 

 

Return on average assets (1)

 

1.00

%

0.76

%

1.26

%

 

Adjustments as noted above

 

(0.03

)%

0.32

%

%

 

Return on average assets excluding adjustments noted above (1)

 

0.97

%

1.08

%

1.26

%

 

 

 

 

 

 

Tangible assets:

 

 

 

 

Total assets

$

48,894,196

 

47,959,883

 

45,119,587

 

 

Less: Goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,973

)

 

Core deposit and other intangible assets

 

(25,881

)

(27,465

)

(32,761

)

 

Net tangible assets

$

47,021,342

 

46,085,445

 

43,239,853

 

 

 

 

 

 

 

Tangible common equity:

 

 

 

 

Total shareholders' equity

$

6,103,851

 

6,035,788

 

5,684,128

 

 

Less: Preferred shareholders' equity

 

(217,126

)

(217,126

)

(217,126

)

 

Total common shareholders' equity

 

5,886,725

 

5,818,662

 

5,467,002

 

 

Less: Goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,973

)

 

Core deposit and other intangible assets

 

(25,881

)

(27,465

)

(32,761

)

 

Net tangible common equity

$

4,013,871

 

3,944,224

 

3,587,268

 

 

 

 

 

 

 

Ratio of tangible common equity to tangible assets

 

8.54

%

8.56

%

8.30

%

 

 

 

 

 

 

Average tangible assets:

 

 

 

 

Average assets

$

48,311,260

 

47,668,519

 

42,983,854

 

 

Less: Average goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,973

)

 

Average core deposit and other intangible assets

 

(26,898

)

(28,573

)

(33,917

)

 

Net average tangible assets

$

46,437,389

 

45,792,973

 

41,102,964

 

 

 

 

 

 

 

Return on average assets (1)

 

1.00

%

0.76

%

1.26

%

 

Adjustment due to goodwill, core deposit and other intangible assets

 

0.04

%

0.03

%

0.06

%

 

Return on average tangible assets (1)

 

1.04

%

0.79

%

1.32

%

 

Adjustments as noted above

 

(0.03

)%

0.33

%

%

 

Return on average tangible assets excluding adjustments noted above (1)

 

1.01

%

1.12

%

1.32

%

 

 

 

 

 

 

Average tangible common equity:

 

 

 

 

Average shareholders' equity

$

6,082,616

 

5,889,075

 

5,605,604

 

 

Less: Average preferred equity

 

(217,126

)

(217,126

)

(217,126

)

 

Average common equity

 

5,865,490

 

5,671,949

 

5,388,478

 

 

Less: Average goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,973

)

 

Average core deposit and other intangible assets

 

(26,898

)

(28,573

)

(33,917

)

 

Net average tangible common equity

$

3,991,619

 

3,796,403

 

3,507,588

 

 

 

 

 

 

 

Return on average equity (1)

 

7.94

%

6.14

%

9.66

%

 

Adjustment due to average preferred shareholders' equity

 

0.30

%

0.24

%

0.39

%

 

Return on average common equity (1)

 

8.24

%

6.38

%

10.05

%

 

Adjustment due to goodwill, core deposit and other intangible assets

 

3.87

%

3.15

%

5.38

%

 

Return on average tangible common equity (1)

 

12.11

%

9.53

%

15.43

%

 

Adjustments as noted above

 

(0.34

)%

3.98

%

0.01

%

 

Return on average tangible common equity excluding adjustments noted above (1)

 

11.77

%

13.51

%

15.44

%

 

 

 

 

 

 

This information is preliminary and based on company data available at the time of the presentation.

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

1. Ratios are presented on an annualized basis.

2. Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets.

3. Total revenue is equal to the sum of net interest income and noninterest income.

4. Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.

5. Annualized net loan charge-offs to average loans ratios are computed by annualizing quarter-to-date net loan charge-offs and dividing the result by average loans for the quarter-to-date period.

6. Capital ratios are calculated using regulatory reporting regulations enacted for such period and are defined as follows:

Equity to total assets – End of period total shareholders' equity as a percentage of end of period assets.

Tangible common equity to tangible assets - End of period total shareholders' equity less end of period preferred stock, goodwill, core deposit and other intangibles as a percentage of end of period assets less end of period goodwill, core deposit and other intangibles.

Leverage – Tier I capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets.

Tier I risk-based – Tier I capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.

Total risk-based – Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.

Classified asset - Classified assets as a percentage of Tier 1 capital plus allowance for credit losses.

Tier I common equity to risk weighted assets - Tier 1 capital (pursuant to risk-based capital guidelines) less the amount of any preferred stock or subordinated indebtedness that is considered as a component of Tier 1 capital as a percentage of total risk-weighted assets.

7. Book value per common share computed by dividing total common shareholders' equity by common shares outstanding. Tangible book value per common share computed by dividing total common shareholders' equity, less goodwill, core deposit and other intangibles by common shares outstanding.

8. Amounts are included in the statement of income in "Gains on mortgage loans sold, net", net of commissions paid on such amounts.

9. At fair value, based on information obtained from Pinnacle's third party broker/dealer for non-FDIC insured financial products and services.

10. Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $250,000. The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities.

11. Associate retention rate is computed by dividing the number of associates employed at quarter end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter end.

12. Adjusted pre-tax, pre-provision net revenue excludes the impact of ORE expenses and income, investment gains and losses on sales of securities, the impact of BOLI restructuring, the impact of the FDIC special assessment and the recognition of the mortgage servicing asset.

13. Represents investment gains (losses) on sales and impairments, net occurring as a result of gains or losses incurred as the result of a change in management's intention to sell a bond prior to the recovery of its amortized cost basis.

14. The dividend payout ratio is calculated as the sum of the annualized dividend rate for dividends paid on common shares divided by the trailing 12-months fully diluted earnings per common share as of the dividend declaration date.

15. Earnings from equity method investment includes the impact of the funding costs of the overall franchise calculated using the firm's subordinated and other borrowing rates. Income tax expense is calculated using statutory tax rates.

16. Tax effect calculated using the blended statutory rate of 25.00 percent for all periods in 2024 and 2023. For periods prior to 2023, tax effect calculated using the blended statutory rate of 26.14 percent.

17. Calculated using the same guidelines as are used in the Federal Financial Institutions Examination Council's Uniform Bank Performance Report.

pnfp-earnings

Contacts

MEDIA CONTACT: Joe Bass, 615-743-8219

FINANCIAL CONTACT: Harold Carpenter, 615-744-3742

WEBSITE: www.pnfp.com

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